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Tech note, everyone – wearable technology is on the move!

We have often associated wearable technology with the fitness industry. Companies such as FitBit have produced spectacular results in this field, harnessing the ability to track and manage anything from distance run to calories burned over a certain period of time.
However, wearable tech is now leaving the wellbeing scene behind and advancing on to a period of world domination.
Advanced wearable biometrics can be used as a form of authentication for a number of things.
NEC corporation has recently adopted the software to identify people placed on ear readings – something previously unprecedented in the industry.
“The system enables biometric authentication via the otoacoustic emission, a sound made by the inner ear when the cochlea is stimulated, arising from the vibration of hair cells,” reports mobileidworld.
“According to a statement from NEC, its earbud device’s “otoacoustic authentication technology… recognizes the characteristics of a user’s ear”, suggesting that the emission is used to map the shape of the inner ear, which is presumably unique to the individual.”
The advancement of contactless, wearable technology is a clear indication of the continued progress of our industry.
The technical possibilities are endless – and NEC confirms this with future plans to commercialise the technology soon.
NEC plans to offer “services that combine individual authentication, indoor positioning, acoustic AR (augmented reality), vital sensing and other technologies”, according to NEC Business Development Division General Manager Tomonori Kumagai.
The contactless revolution has only just begun – don’t get left behind.

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Fingerprint Tech: A New Age Of Payments

Credit card payments have come a long way; from chip & pin to contactless taps, card payments are being revolutionised everyday. However, another form of payment has come to the forefront of business payment solutions.

Currently, fingerprint technology is worth an estimated $2billion a year in Japan, and is growing rapidly due to it’s convenience for both the consumer and the business.

What is fingerprint technology and how does it work?

Fingerprint tech is revolutionising the way consumers pay for their goods. It begins with the consumer purchasing a credit card that has their fingerprint stored within the details. After that, they simply pay for their goods by placing their finger on a fingerprint scanner at the checkout. And as simple as that, they get to walk away with their goods in hand.

What are the benefits of fingerprint technology?

If contactless cards worried consumers, then fingerprint payment is the ideal solution. For example, if the consumer forgets their card or loses it before paying, they simply need to scan their fingerprint and walk out of the store. Not only will this save them time, but also means your business does not lose profit it otherwise might have. As well as the additional monetary benefit, workplace efficiency is almost doubled due to the quick nature of the payment.

Fingerless payments are looking to replace or become an alternative to Apple Pay; a market that is also growing rapidly due to it’s convenient nature. It also has the added benefit of total security. There may even come a time when the consumer will no longer need to carry card or cash – simply their fingerprint. Although there might be limitations (for example not being able to use multiple fingerprints for different bank accounts) the security of the process simply cannot be denied for both the consumer and the business.

Here are CheaperPay we understand the need for your business to stay ahead of the curve without the added costs – so we’re offering a limited time offer of 3 months FREE when you sign up for our service!

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Selfies And Contactless Rings: New Ways To Pay

The way we pay for goods is changing. Get ready for Selfie Pay, contactless payment rings and iris scanners.

What if you could use a selfie to pay for things? How about the rhythm of your heart?

New technologies that could change the way we buy things have been shown off at the Gherkin as part of London Tech Week.

Selfie Pay takes everyone’s favourite vanity exercise and makes it useful: allowing you to authorise a transaction with your face.

The app requires you to blink so it knows you’re really there and someone isn’t using a photo of you to fraudulently authorise a transaction.

The idea is to get rid of the need for passwords, instead using biometrics: unique data based on individual characteristics like your face, eyes or fingerprint.

“If you think about passwords, they’re a standalone measure,” said Jane Khodos from MasterCard. “They’re easily lost, stolen or forgotten.

“Here you’re authenticating with what you have: your phone and also who you are.”

You could use this kind of tech to buy goods, pay for bus or train fares, or to log into your computer.

We also saw more of Nymi: a wearable wristband that can identify you by the unique rhythm of your heart, found in your electrocardiogram (ECG).

Your heart rhythm is not to be confused with your heartbeat, so the band would still work if you had just run for a bus, for example.

“We’re also very concerned about the security issues, it’s something that’s top of the mind for us,” said Amy Neal from MasterCard Labs, the company’s research and development division.

It is not just biometrics that could change payments.

Kerv is said to be the world’s first contactless payment ring: a simple piece of technology that essentially means you are wearing a contactless payment card.

Payment tech inventors emphasise that there is no need to choose just one of these products.

“You can start to bundle biometric authentication together,” says Ms Neal. “So you might have Selfie Pay, but also the electrocardiagram for additional security.

“We hear stories like people are concerned that they may have an identical twin, so what does that mean if you’re doing selfie pay?

“For us this is ensuring that we have a full suite of biometrics available.”

The Kerv ring is due out in July, Selfie Pay comes out in the UK this year and the Nymi band and iris scanner are both still in development.

 


Team, T.S. (2016) Selfies and Contactless rings: New ways to pay. Available at: http://news.sky.com/story/selfies-and-contactless-rings-new-ways-to-pay-10323052 (Accessed: 15 July 2016).

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London’s contactless Tube payment system is going global

Other cities will soon be able to use TfL technology to develop their own contactless payment systems.

The contactless payment system used on London’s transport network will soon be modified for use in other cities.
A deal between Transport for London (TfL) and transportation firm Cubic will see the latter adapt the contactless ticking system and license it around the world. The deal, worth up to £15 million, will help TfL ensure fares don’t rise for the next four years, the mayor’s office said.

Cubic will be given access to London’s contactless system to allow it to tailor it to other transportation networks. The company first worked with TfL in 2003 to develop the technology behind Oyster and has since helped upgrade the system to support contactless payments from debit cards, Apple Pay and Android Pay.

Outside London, CTS provides similar ticketing technology to Brisbane, Chicago, Sydney and Vancouver. The non-exclusive deal with TfL will allow the company to integrate technology developed for London’s network into other transport systems.
According to TfL, more than 500 million journeys have been made by more than 12 million unique credit and debit cards since the contactless system launched on London’s busses in December 2012. The technology was expanded to cover Tube and rail in September 2014 and has been used by customers from 90 different countries with one in ten contactless transactions in the UK made on TfL’s network.

Cubic continues to run TfL’s ticketing and fare collection services on 8,500 busses, 1,900 Underground and Overground ticket gates and 1,600 ticket machines across the network.

 


Temperton, J. (2016) London’s contactless tube payment system is going global. Available at: http://www.wired.co.uk/article/london-underground-contactless-payments-licensing-deal (Accessed: 15 July 2016).

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Apple Pay is coming to the web – but there’s a catch

Apple Pay will soon be available on in browsers on macOS and iOS, but payments will still have to be authenticated on an iPhone.

Following months of rumours, Apple has confirmed it is launching Apple Pay on the web.

The feature was unveiled at the annual Worldwide Developer Conference and will let you pay for goods through Safari on macOS and iOS. Payments will still need to be authenticated using a fingerprint-enabled iPhone or the Apple Watch.

When customers are browsing on supported websites – such as Crate and Barrel and lululemon – an Apple Pay button will appear. It will work in a similar way to Apple Pay on apps.

Previously, to use Apple Pay iPhone users could store their card details into the contactless system and use NFC to tap and pay for goods in participating stores. Alternatively, they could use Apple Pay to buy items on selected iPhone apps.

Today’s announcement expands this to the web. People shopping on a website on a Mac, or via Safari on their phones, will get a notification on their iPhone to confirm the transaction, which this is done using TouchID.

 

Apple Pay will be limited to £20 until September, when payments up to £30 will be allowed

Apple Pay will be limited to £20 until September, when payments up to £30 will be allowed

This means users won’t have to manually enter credit card information on individual websites or store them online when buying goods because the payment – and security – is routed through the Apple Pay system.

The new features are due to start rolling out to the UK and US countries “soon” and WIRED has contacted Apple to get more information and details of supporting websites.

Apple Pay launched in the UK last year and brought the contactless payment system to stores including Boots, Costa, Lidl, Marks & Spencer and Nando’s.

More than 250,000 shops across the UK now accept Apple Pay, with Transport for London also supporting the payment method on its network. The UK was the second country to get Apple Pay after the service launched in the USA in October 2014.

 


Woollaston, V. (2016) Apple pay is coming to the web – but there’s a catch. Available at: http://www.wired.co.uk/article/apple-pay-web (Accessed: 12 July 2016).

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WIRED Money 2016 Startup Stage: new ways to pay

Want to save £1 every time you run a mile? How about a keyboard that lets you pay from WhatsApp?

What will be the next fintech breakthrough? On June 23, 16 startups from around the world gathered at the British Museum in London to pitch on the WIRED Money Startup Stage.

From blockchain to alternative lending and working in emerging markets, the startups had five minutes to pitch their ideas to our expert judges. On the panel, Marisol Menéndez Alvarez, open innovation manager at BBVA; Yann Kandelman, head of investment at Orange Digital Ventures and James Temperton, acting deputy editor of WIRED.co.uk.

These pitches are all focused on digital-only banks and new ways to pay.

Modern Lend

WIRED Money 2016 Startup Stage winner

If you’re coming to the US to work or study, getting credit and loans can be tricky. Kobina Ansah, co-founder and CEO of ModernLend is trying to change that. His startup uses alternative data metrics to provide credit cards and loans to creditworthy international citizens shut out of the US system.

Traditional banks may decline borrowers who lack a US credit history, says Ansah. These people, hugely creditworthy in their home countries, are unable to borrow in the US as they lack a credit history or social security number. The startup is already working with the international student offices at the University of Pennsylvania and NYU and will launch its first card for international citizens this autumn.

Oval Money

Saving is a $35 trillion global market, but only 18 per cent of young adults save with a major financial institution. Benedetta Arese Lucini, co-founder and CEO of Oval Money, wants to make it more fun. The savings app uses MangoPay to create a digital wallet that lives on a user’s smartphone.

Oval Money gamifies saving using an ‘If This Then That’ model to tap into pretty much any API: run five miles? Save £1. Buy something from Amazon? Save five per cent of the total purchase. Oval Money can also use micro-transactions, making it easy to save tiny amounts regularly to build up a large pot.

PayKey

Herzliya, Israel-based PayKey wants to make it easy to pay for goods within any app. The idea is simple, Dario Mutabdzija, president and head of business development: a white-label keyboard for iOS that lets anyone transfer money to anyone else in an app. According to Mutabdzija, incumbent banking and payment apps aren’t contextual or “integrated into the daily lives of consumers”.

As PayKey is totally service agnostic, it can work anywhere, so users can pay within Twitter, Instagram, Facebook, WhatsApp – wherever.

Robin

If you’ve got kids, there’s a chance you already provide them with financial services – but you probably call it pocket money. Robin aims to “connect kids to the financial world through their parents in a safe way,” says Robin CEO Rogelio Valdés Garcia. The app, which links a wallet with a parent’s bank account, uses gamification to encourage responsible saving and money management.

When it launches Robin will charge £2 per month to use the service and hopes to partner with banks to move children onto real accounts when they are old enough.

 


Temperton, J. (2016) WIRED money 2016 startup stage: New ways to pay. Available at: http://www.wired.co.uk/article/wired-money-2016-startup-stage-digital-banks (Accessed: 11 July 2016).

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Contactless payments in vogue for Barclaycard and Topshop accessories

News: Card payments on the increase as mobile and contactless take off.

Barclaycard and Topshop have teamed up on a range of contactless payment accessories.

The NFC-enabled bracelets, phone cases and keychains come as part of the bPay collection that was launched in 2014.

Users that have a UK registered Visa or MasterCard, debit or credit card will be able to add funds to their digital wallet using a mobile app, online through the bPay web site, or set up an automatic top-up, which will add funds to their balance one it falls below a pre-set level.

The accessories contain a bPay chip by Barclaycard that links to the digital wallet.

Britain is clearly a big fan of contactless payments and paying by card instead of cash, with rising online and contactless transactions increasing spending on debit and credit cards by 10% to £660 billion in 2015.

Online card spending increased by 20% to £210 billion from £175bn in 2014, this means that almost a third of plastic spending takes place on the internet. Paying by mobile is also on the increase with half of online spending taking place on tablets and smartphones, up from 37% in 2014, according to figures from the UK Cards Association show.

Contactless payments are also on the increase, partly thanks to the increase in the payment limit to £30 and nearly half of all cards issues now having contactless capabilities. In 2015 £7.75bn was spent via tap and pay, compared to £2.32bn in 2014.

Graham Peacop, CEO, UK Cards Association, said: “With the amount spent using contactless cards almost trebling between 2014 and 2015 and the payment limit increasing to £30, it is clear 2015 was the year contactless went mainstream.

“Whether buying a sandwich on the go, or paying for a round of drinks or a tube journey, contactless has become the default way people choose to pay for every day shopping.”

 


Nunns, C.J. (2016) Contactless payments in vogue for Barclaycard and Topshop accessories. Available at: http://www.cbronline.com/news/internet-of-things/consumer/contactless-payments-in-vogue-for-barclaycard-and-topshop-accessories-4919256 (Accessed: 8 July 2016).

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Barclaycard bPay turns watches contactless

Barclaycard is expanding its bPay contactless payments range through the introduction of a small case that can be attached to watches and fitness bands.

The bPay Loop is a silicon case containing an NFC chip that can be slid onto the strap of watches and fitness bands with open buckles.

Launched in 2014 bPay is available to anyone with a UK-registered Visa or MasterCard, debit or credit card, not just Barclaycard and Barclays customers. Users add funds to their digital wallet on-the-go using a mobile app, online through the bPay web portal, or set up an automatic top-up which adds funds when their balance falls below a pre-set level.

Bpay was initially launched as a wristband and is also available as a sticker and fob, with over 100,000 products sold. Barclaycard says that the latest Loop version comes in response to customer demand for a way to add payment functionality to wearables people already own.

Available to buy online for £19.99, Barclaycard has also teamed up with Swiss watch maker Mondaine and fitness tech outfit Garmin to offer Loop to those purchasing selected items from both brands.

Tami Hargreaves, commercial director, digital consumer payments, Barclaycard, says: “Thanks to the huge growth we are seeing in contactless payments, we are increasingly becoming accustomed to being able to make low-value payments throughout the day, in a quick, easy, convenient way. Loop makes that easier than ever.”


Finextra (2016) Barclaycard bPay turns watches contactless. Available at: https://www.finextra.com/newsarticle/29140/barclaycard-bpay-turns-watches-contactless (Accessed: 7 July 2016).

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Forget your phone, Visa just put a ring on mobile payments

Anyone who has watched TV or an Apple or Google keynote event within the past year knows that paying for things with anything but your credit card is all the rage. Visa, not to be left out being a leader in all things money, is experimenting with a new device.

Meet the Visa payment ring. Set to launch at the 2016 Olympic Games in Rio, Brazil for the firm’s 45 athletes repping Team Visa, a prototype of the device was shown off at an event in New York City.

You’ve seen something – seemingly thinner and lighter, at that – like this before in the Kerv ring earlier this year. However, Visa does have a first to tout with its own payment ring: tokenization.

Ringing in payments for Rio

Using its Visa Token service, which replaces the attached card’s sensitive payment information with a unique digital identifier, the ring can be used to process payments without exposing any account details in the transaction. And, the process is stupid easy.

When an NFC-ready payment terminal is prepared to accept a card, just make a fist and gently “fist bump” the terminal. Your payment is accepted automatically from there, as if you had just swiped your card.

However, save for a secure microchip made by Gemalto and a tiny, NFC-enabled antenna, there’s nothing else inside this waterproof ring (to a depth of 50 meters) designed by McLear & Co. That means there’s no need to charge this device, as any payment terminal picks up the hard work once it reads Visa’s unique token from the ring’s otherwise dormant microchip.

All said, there are two catches when it comes to Visa’s payment ring. First, it’s a tied to a prepaid, contactless debit card (seen above) supplied by Visa. Athletes will have to load up their card – err, ring – with cash via an online portal before gently punching the nearest point of sale.

Second is that I was told several times by several Visa representatives that this is very much a test for Visa. (I was also told that the ring will be shaved down a bit before the big event.) Should things go well down in Rio, the firm will consider a wider release of the device.

Once the ring gets the Olympian seal of approval, perhaps we’ll see an official Visa Payment Ring tied straight to our debit cards. Honestly, I just want an excuse to coin the term “Punch Payments.”

 


Osborne, J. (2016) Forget your phone, visa just put a ring on mobile payments. Available at: http://www.techradar.com/news/wearables/forget-your-phone-visa-just-put-a-ring-on-mobile-payments-1322670 (Accessed: 1 July 2016).
In-text citations:

  • (Osborne, 2016)
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Pay your car licence – with your card!

Cape Town – The City is testing the use of card payment facilities at its motor vehicle registration office at the Civic Centre.

The use of card payment facilities will be for one week before the City expands this service to other motor vehicle registration facilities across Cape Town, such as the Promenade Mall, Milnerton, Khayelitsha and Plumstead.

On the first day of the pilot, more than 100 credit and debit card transactions were processed.

The city-wide roll out to motor vehicle registration offices is expected to take approximately two months. According to deputy mayor Ian Neilson, the expansion of card payment facilities for the payment of rates and tariff accounts and traffic fines will take a bit longer as system upgrades are required.

The City will accept payments of up to R5000 per transaction by credit or debit card, or any other means of payment which does not hold any cost implications.

“This amount covers most transactions by our clients,” Neilson said, “be it for motor vehicle licences, rates, services bills or other sundry payments. The City will, however, reclaim the relevant banking fee for any payment over R5000.”

As electronic payments carry the lowest bank charges, more than 60 percent of payments to the City are via this method.

“Our first day of testing went well and 103 card transactions to the value of approximately R45 000 were processed,” he added.

“The success of our online offerings, such as receiving municipal accounts by e-mail and the option of registering for the City’s e-services portal, allows for online payments of rates, tariffs and motor vehicle licence payments for clients,” said Neilson.

 


Kent claims 90% of waste handled in UK (2016) Available at: http://www.letsrecycle.com/news/latest-news/kent-claims-90-of-waste-handled-in-uk/ (Accessed: 1 July 2016).
In-text citations:

  • (Kent claims 90% of waste handled in UK, 2016)
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How will the homeless survive in a cashless society?

In less than ten years time it is estimated that only one in four payments will made by cash.

Although it might feel to some like we have reached that point already, it will mark a dramatic shift from the current status quo when around half of all payments are made by notes or coins.

But while the shift to a cash free existence might feel like an inevitability, there are people on the fringes of society who are so reliant on it, that a life without it almost seems like an impossibility.

Yet, there is a growing awareness amongst the homeless and those that support them that action needs to be taken now so they are ready when the time comes.

For those with no fixed abode there are a huge array of different hurdles that need to be jumped in order for them live a life not wholly reliant on cash.

LONDON, ENGLAND - JANUARY 27: Two homeless men sleep near Trafalgar Square on January 27, 2016 in London, England. A group of 21 charities, including Crisis, St Mungos and Centrepoint, have called for extra effort by the next London Mayor to help end the growing problem of homelessness on Londons streets. (Photo by Dan Kitwood/Getty Images)

Only 1 in 4 payments will involve cash by 2025 (Picture: Dan Kitwood/Getty Images)

Take setting up a bank account, for instance.

It seems tough enough when you have a permanent address, proof of other credit facilities and ID.

But when you don’t it becomes a whole lot harder.

And that is why charities like St Mungo’s and the Big Issue Foundation (the charitable arm of the Big Issue) are working hard to help as many people as possible gain access to the things we take for granted.

Around one in four of St Mungo’s clients dont have a bank account, many having only dealt with cash before.

(Picture: iZettle)

The Bis Issue is amongst those looking alternative payment methods (Picture: iZettle)

David Fisher, the charity’s executive director of services, said setting up bank accounts and other services, like phone contracts, can be difficult without a permanent address.

He added: ‘It’s important that people who may be homeless or vulnerable aren’t left behind when it comes to living in an ever evolving and innovative society.’

Paul McNamee, who is the editor of the Big Issue magazine, told metro.co.uk it is also working with its vendors to ensure they have the facilities they need.

‘We haven’t necessarily noticed a negative impact on our sales because of the move to cashless,’ he said.

‘But we know that’s going to come which is why this is something we are looking to get ahead of.’

He explained discussions are ongoing with banks to ensure people selling the Big Issue will be able to take both contactless and cash payments.

‘Because it’s essentially a cash environment our vendors work in, we’ve also had to consider how they will be able to cash up because they are leading lives that are pretty hand to mouth some of the time,’ he continued.

‘We are working with vendors to enable to them do those things. To help them get ID, whether that’s tracing back to help them get a National Insurance number, helping them getting ID or passports.’

(Picture: Simon Mott)

Simon Mott is the first Big issue vendor to take cashless payments in the country (Picture: Simon Mott)

The magazine has been trialling cashless methods of payment in a number of different locations across the country.

But there is one vendor, who pioneered the method off his own back and has been reaping the benefits ever since.

Simon Mott first invested in a chip and pin device through Swedish company iZettle a few years ago.

The 52-year-old, who sells the Big Issue outside South Kensington Tube station, spent £59 on the initial device but now takes around £500 a year in chip and pin, contactless and Apple Pay transactions.

‘I wouldn’t have seen that money if it wasn’t for the card reader,’ he told metro.co.uk.

(Picture: iZettle)

He estimates he takes around £500 a year in cash free transactions (Picture: iZettle)

He said the investment was a reaction to what he realised was a growing issue.

‘People say to me I’d like to buy the magazine but I don’t have money on me,’ he continued.

‘In the past it might have been a polite put down, when nowadays it’s actually true, they haven’t got any money or change.’

Simon said one noticeable difference about taking card payments, is that the money does not go in to his pocket instantaneously. And he thinks that’s a good thing.

‘You don’t have access to those funds immediately, it might be a couple of days  before it goes in to your bank account,’ Simon added.

LONDON, ENGLAND - AUGUST 04: Bedding belonging to a homeless person lies under a railway bridge on August 4, 2015 in London, England. Income inequality in the United Kingdom is higher than many other developed countries with a 2014 report by the Institute for Fiscal Studies claiming that around 23% of Britons were now in relative poverty. (Photo by Carl Court/Getty Images)

(Picture: Carl Court/Getty Images)

‘You don’t have the money to spend and waste it. It encourages the forethought of managing your money in a better way really

‘I think things are going to have to change.

‘This isn’t just from the Big Issue’s point of view but from that of other homeless people begging on the streets, if people don’t change then they are going to suffer as well.’

 


Meyjes, T. (2016) How will the homeless survive in a cashless society? Available at: http://metro.co.uk/2016/06/10/how-will-the-homeless-survive-in-a-cashless-society-5936662/ (Accessed: 29 June 2016).

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Brexit: Possible Impacts on the UK Payments Market

Following Britain’s momentous decision to leave the European Union our thoughts must inevitably turn to the potential impact on UK consumer payments.

In this blog we provide some early thoughts on how the UK market may be affected, beginning with recent European regulation which will have to be untangled.

First, let us look at how the two Payment Services Directives may be approached by the UK government. Will the PSD1 remain on the statute book, and the PSD2 implemented as planned? The answer at this stage is probably. Many aspects of European legislation related to consumer protection are likely to remain because they did not fundamentally change existing UK rights. The UK government’s approach to account access is generally more progressive than that embodied in the PSD2, so this will probably be superseded by UK Open Data Initiative.

The biggest change will be in the area of licensing and passporting. The FCA has established a good reputation with innovative European payments businesses for its regulatory regime. These eMoney and Payment Institutions will probably to move their headquarters to other European markets, and we will be poorer for it both commercially and from an innovations perspective. Changing the approach to passporting will affect the UK’s cross border acquirers the most. Many UK acquirers rely on passporting FCA regulatory licenses to support their local acquiring offers across the EU. Unless they already have licenses in other EU markets, acquirers will need to seek new EU regulatory approval to operate across the continent, and to sign new merchant contracts.

Second, interchange regulation. The UK CMA has always taken a close interest in the payments market, and many issuers expected interchange to decline in the medium term. It therefore seems unlikely that credit interchange will suddenly return to its previous levels. It may be that debit migrates back to the historical fixed price approach. This is particularly important within the context of the announced move to a basic 0.2% (removing the 50p cap and 1p fee) expected for Visa Debit in September. We can therefore expect modest change in the interchange arena.

The European Banking Authority will almost certainly move, possibly to Paris to balance the ECB in Frankfurt. However, may have little impact on the UK consumer payments market as they have played a relatively modest role to date.

How may the international card schemes react? Both have substantial presence in the UK, particularly Visa. It seems likely that Visa Inc. will increase its presence in Continental Europe as part of a wider restructure as other roles are migrated to the US. MasterCard may also to shift its emphasis to Waterloo away from Canary Wharf. Both schemes will need to adapt their licensing approaches, but these are already flexible enough to accommodate the inclusion of non-EU markets. Such moves by the card schemes may be to the detriment of London and the UK, but the impact will probably be modest.

The impact on data processing and data security remains unclear. Will the UK be treated as an off-shore location for card and payment processing? This will be a matter for the lawyers to resolve, but could affect Visa’s UK processing hub, or MasterCard’s rumoured purchase of VocaLink. New payments processors arriving in Europe from the US or Asia are also much less likely to locate their business in the UK.

Will there be a substantial change in the structure of issuers and acquirers of consumer payments (either cards, credit transfers or direct debits)? We have already highlighted the impact on cross border acquiring, and both regulators and schemes will need to adapt accordingly. On the issuing side markets are unlikely to change their activities as they are either domestically focussed, or already manage operations both inside and outside the EU.

Now let’s look at users of payments. Will consumer spend day to day be affected? Again, probably not. Consumers in the UK do not use SEPA Direct Debits or SEPA Credit Transfers domestically. They will continue their preference for cards in store, and online. The growth in online payments will continue, alongside the growth in contactless in-store. Similarly it seems unlikely that there will be a substantial change in the merchant landscape. The UK will remain a vibrant market where retailers online and offline will fight for consumer spend. It seems less likely that our exit from the EU will impact this to any great degree.

We have suggested that there may be some potential downsides particularly in the area of acquiring and processing. Will there be any upsides? At this stage we struggle to see any, which is a great disappointment. Perhaps benefits will emerge from the current maelstrom by 2017.

So, in conclusion, impacts on the UK consumer retail payments market will most probably be concentrated in areas such as licensing, cross border acquiring and processing. However, in the long term we are optimistic that the UK consumer payments market is likely to remain innovative and forward looking and get past these issues.

 


Finextra (2016) Brexit: Possible impacts on the UK payments market. Available at: https://www.finextra.com/blogposting/12770/brexit-possible-impacts-on-the-uk-payments-market (Accessed: 27 June 2016).

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Is your business prepared for the cashless economy?

The UK is on the fast track to being cash-free, but are our small and medium businesses ready?

The pounds in your pocket are destined for the museum display cabinets. This is according to new research by trade association, Payments UK, who predict that debit card and contactless payment use will overtake cash transactions by 2021 after finding that cash transactions accounted for less than half of consumer payments for the first time in 2015.

There’s no doubt that contactless technology has transformed consumer buying, and with Apple and Android Pay now available, it’s clear that the days of counting out coppers for a pint of milk and a Mars bar will soon be over.

Who has the least cash?

Citigroup and London’s Imperial College latest Digital Money Index indicates that the UK has begun to sprint ahead in the global race to becoming a cashless society after rising from 7th to 4th place in the list of countries that are most ‘digital ready’. Finland topped the list as the most digital-ready country for the third consecutive year, with Singapore and the US following behind in second and third place respectively.

Finland’s continued position as a digital leader is unsurprising considering their strong investment in digital infrastructure. Fixed broadband is available to 97 per cent of Finnish homes; this combined with affordability has helped Finland become one of the most tech savvy nations, with 91 per cent of the population being regular internet users. Furthermore, according to the Digital Economy and Society Index (DESI), Finland has one of the highest shares of eGovernment users and users of eHealth services in Europe. The Finnish government’s integration of digital and public services has further embedded digital processes into everyday life, meaning that digital payment is just another aspect of efficient modern living.

Contactless: the consumer’s choice

The rapid change in the UK’s payment habits can largely be attributed to big brands’ early adoption of contactless. In 2014 Tesco updated all 6,000 of their payment terminals in London to accept contactless payment, they announced that this would save 6 seconds for every customer that used it. For a consumer that is often time poor, 6 seconds less spent in a queue is 6 seconds less stress but more importantly for Tesco it speeds up customer service which enhances the customer experience.

However, contactless payment hasn’t always been hailed as a hero. Transport for London’s (TFL) announcement that its buses would go cashless in 2014 was initially met with scepticism. Nonetheless, since TFL has rolled out contactless across its network, more than 400 million journeys have been made using credit or debit cards or a mobile device, revealing that contactless is an option that offers consumers more, not less choice.
While Tesco and TFL helped lead the way in implementing wave and pay into our everyday lives, the increase in the contactless spend limit from £20 to £30 further pushed contactless mainstream by boosting retailer opportunities and encouraging a wider range of merchants to adapt their payment systems. In 2016, from petrol stations to pubs, consumers can go about their daily lives without having to enter their pin.
Contactless may have won London over first, but a recent study by Barclaycard found that contactless is growing fastest in Manchester, Glasgow and Cardiff. Furthermore, the study also revealed that the over 60’s, the group often deemed as ‘technophobes’, are the fastest growing adopters of contactless card payments. The popularity of contactless across generations offers further evidence that wave and pay is here to stay as more consumers look to utilise new technology that will allow them to make safer, more convenient payments.

Better for business

The swift infiltration of contactless into our everyday lives has certainly raised customer expectations of the pace and ease of service, meaning that businesses not offering customers the payment options they expect, risk undermining their reputation by appearing out of touch.
However, the new way to pay offers considerable benefits to businesses too. Sage Pay’s Payments Landscape Report 2015, found that annual cash handling costs, including allowance for fraud and theft, set UK retailers back more than £3,600 on average. By offering cashless payment options, businesses will benefit hugely from reduced cash handling costs. While digital payments are not completely free from fraud, the risk is significantly lower. Figures from the UK Cards Association show that in the first six months of 2015, fraudulent transactions were equivalent to only 2p for every £100 spent using contactless functionality.

In addition to speedier, safer transactions, digital payments also open up the possibility of integrated reward programmes and location-based marketing. Tapping into these smartphone capabilities will allow businesses to use customer data to deliver tailored marketing campaigns, enhancing customer experience and encouraging loyalty.

While the question of whether the UK will turn completely cashless remains debatable, there’s no doubt that paying for a latte with a quick swish of your wrist has become so commonplace that digging deep in your purse for cash feels like an archaic practice. Whether you’re a high street store, independent coffee shop or a local newsagent, consumers now expect to be able to pay with lightning speed. Cashless is coming, make sure you’re prepared.

 


Growth Business UK. 2016. Is your business prepared for the cashless economy?. [ONLINE] Available at: http://www.growthbusiness.co.uk/comment-and-analysis/2532811/is-your-business-prepared-for-the-cashless-economy.thtml. [Accessed 24 June 2016].